India Freezes Payment for AgustaWestland Helos

Feb. 14, 2013 - 11:15AM
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NEW DELHI — India has put on hold payment for nine of the 12 VVIP helicopters it had contracted in 2010 from AgustaWestland for $720 million pending closure of an investigation by the Central Bureau of Investigation (CBI), India’s anti-fraud agency. The probe was ordered Feb. 12 after the arrest of Finmeccanica CEO Giuseppe Orsi in Italy on alleged corruption charges.

India has already received three of the 12 helicopters and the remaining nine are due to be delivered by year end. Ministry of Defence sources said 70 percent of the total amount due has been put on hold until the finalization of the CBI report.

While an executive of the Italian company said they will continue to do business as usual, analysts here say it won’t be long before the company is blacklisted from doing business in India.

All oversees defense companies doing business in India have to sign an integrity pact under which they agree to compete without the help of any middleman or agent.

Indian Defence Minister A.K. Antony told reporters Feb. 13, “We cannot set a time line. But we asked the CBI for an early enquiry. We will wait at least for a preliminary report and act on that.”

The AgustaWestland helicopter issue is likely to become a political issue in the run up to Indian general elections in mid-2014, as the opposition could attempt to link the Italian company to Italian-born Sonia Gandhi, the current president of the Congress Party, said Nitin Mehta, a defense analyst.